Revision and practice on a business's ethical responsibilities to stakeholders.
Key vocabulary: Ethics, Corporate Social Responsibility, Fair Trade, Transparency
Key Concepts
Ethical Responsibilities
Ethical responsibilities go beyond legal requirements. A business may follow the law but still behave unethically — for example, paying the legal minimum wage while making billions in profit. Ethics is about doing the right thing, not just the legal thing.
Why ethical responsibilities matter:
Builds trust with customers, employees and the wider community.
Attracts and retains talented employees who want to work for a responsible business.
Protects brand reputation.
Reduces the risk of boycotts, protests and regulatory action.
Stakeholder group
Ethical responsibilities
Employees
Pay fair wages. Safe working conditions. Support employee wellbeing. Offer equal opportunities.
Customers
Honest advertising. Charge a fair price.
Suppliers
Pay suppliers on time. Ethical supply chains, i.e. free from exploitation, child labour etc.
Community/Environment
Minimise pollution, waste, carbon emissions. Manage noise & traffic disruption. Taking genuine steps to reduce environmental impact (not just "greenwashing").
Ethics Vs Profit
Ethical behaviour often costs money. Businesses face a constant tension between doing the right thing and keeping costs down to remain competitive and profitable.
Where the tension shows up:
Paying higher wages reduces profit margins in the short term, even if it improves retention and productivity over time.
Using ethical or sustainable suppliers often costs more than choosing the cheapest option.
Investing in environmental improvements (such as reducing packaging) adds cost that may not generate immediate revenue.
Being transparent about mistakes or failings can damage the brand in the short term, even though it builds trust long term.
Real-World Case Studies
Shein — ethics scrutiny weighing on a company's value
Shein's long-delayed stock market listing finally went ahead on the Hong Kong exchange in September 2026, valuing the company at around $27 billion — roughly 70% below its 2022 private valuation of nearly $100 billion. A major reason: persistent ethical concerns, including a 2025 BBC investigation finding supplier workers doing 75-hour weeks in breach of Chinese labour law, and unresolved questions over whether any of its cotton is linked to forced labour in Xinjiang. This shows that unresolved ethical concerns about a supply chain aren't just a reputational risk — they can directly reduce what investors are willing to pay for a business.
Source: verified via search, September 2026 — CNN Business and Business & Human Rights Resource Centre coverage of Shein's Hong Kong listing and labour practices.
Tony's Chocolonely — locking in ethics regardless of who owns the company
Tony's Chocolonely, a chocolate brand built around ending forced and child labour in cocoa farming, introduced a legal structure called "Tony's Mission Lock" that gives a separate governing body a "golden share" — meaning its ethical sourcing principles cannot be watered down even if the company is sold or its shareholders change. In 2026 it was one of only two chocolate brands worldwide to score "green" on an independent industry ethics scorecard. This is a structural solution to the ethics-vs-profit tension: rather than relying on management to keep choosing ethics over cost-cutting, the mission is protected by the company's own legal structure.
Source: verified via search, September 2026 — Moodie Davitt Report coverage of Tony's Mission Lock, and the 2026 Chocolate Scorecard results.
Sort It: Ethical or Unethical?
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✅ Ethical
❌ Unethical
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Quick Knowledge Check
Short, snappy recall questions — tap to reveal the answer.
State one ethical responsibility a business has to its employees. (1 mark)
Any one of: pay fair wages, safe working conditions.
What does it mean for ethics to 'go beyond legal requirements'? (1 mark)
A business can follow the law but still behave unethically.
State one way ethics and profit can be in tension. (1 mark)
Paying higher wages reduces profit margins in the short term.
Matching Activity
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Key Term Flashcards
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Ethics
Doing the right thing, not just the legal thing — ethical responsibilities go beyond what the law requires.
Corporate Social Responsibility (CSR)
A business demonstrating commitment to social and environmental goals, to satisfy community and government stakeholders.
Fair Trade
A certification showing producers, such as farmers, were paid a fair price for their goods.
Transparency
Being open and honest with stakeholders, including about mistakes or failings.
Greenwashing
Claiming to be environmentally friendly without taking genuine action to back it up.
Ethics vs profit tension
Ethical behaviour often costs money in the short term (e.g. higher wages, sustainable suppliers), creating tension with the goal of keeping costs down.
A*/A Stretch
Synoptic link
Connecting to social enterprises (earlier in 3.1.2): A traditional business practising strong CSR and a social enterprise are not the same thing, even though both can look "ethical" from the outside. Strong students should be able to explain that a social enterprise's primary purpose is social/environmental, with profit reinvested into that mission — whereas a traditional business practising CSR is still primarily aiming to maximise profit, and treats ethical behaviour as a way to support that goal (via reputation, trust, and reduced regulatory risk) rather than as the main objective itself.
Examiner's eye
This unit's 6-mark "Analyse" question has a specific mark scheme structure (AO1 = 2, AO2 = 2, AO3 = 2, see slides 14–15) that's different from the 9-mark "Analyse" questions used elsewhere in this course. Don't assume every "Analyse" question is marked the same way — always check the number of marks available, since it tells you how much application and chained reasoning the answer needs.
Try This With AI
Before using this: AI tools can get facts or mark scheme details wrong, and quality varies by tool. Always check anything factual against your notes or ask your teacher.
Give me a short scenario about a business facing a decision that would cut costs but harm its ethical reputation (e.g. with suppliers, staff or the environment). Ask me to write a 6-mark "Analyse" answer using the State/because/Leading to/Therefore/Meaning that/Resulting in structure, then check whether my answer applies to the specific scenario rather than just staying generic.